The B10/B10.A congenic mouse pair serves as a model for identifying specific genes related to morphogenesis and dysmorphogenesis of the embryonic palate and other organs. The present report describes our initial investigation of the Fraser-Juriloff paradigm, which proposes that susceptibility to malformation results from genetically determined differences in normal developmental patterns. Specifically, we evaluated the relationship between Igf2r gene expression, transforming growth factor-beta (TGF-beta) activation, and cdk4 gene expression. By using in situ hybridization, RNase protection assays, indirect immunofluorescence, Western blots, and bioassays, we show 1) the presence of insulin-like growth factor II (IGF-II), IGF-II receptor (IGF-IIR), IGF-IR, TGF-beta, plasminogen, plasminogen activators [urokinase plasminogen activator (uPA) and tissue plasminogen activator (tPA)], and Cdk4 in developing palates; 2) on embryonic day 14 (E14), which is a critical day for palatal growth, B10.A embryos have 82% greater IGF-IIR mRNA than B10; 3) on E14, B10.A embryonic palates have a 57% greater level of active TGF-beta2 than B10, although the total TGF-beta2 is nearly identical; and 4) on E14, B10 embryonic palates have a 52% greater level of Cdk4 mRNA than B10.A palates, a measure of cell cycle progression. Because cellular activation of latent TGF-beta appears to require binding to the mannose-6-phosphate (M6P) binding site of the IGF-IIR and is plasmin and plasminogen activator dependent, the positive correlation of IGF-IIR levels and active TGF-beta2 levels seems to be key. Thus, the strain variation of TGF-beta2/IGF-IIR-mediated growth inhibition in late G1 phase would appear to account for the slower growth and development of B10.A palates relative to B10. Elevated corticosteroid (CORT) exposure in E14 B10.A embryos significantly increases TGF-beta levels, 87% of which is TGF-beta2, as well as the levels of active TGF-beta, 64% of which is TGF-beta2. Without exogenous CORT, B10.A embryos do not have clefts; hence, we present an outline of pathogenesis: slower growing B10.A embryos have an up-regulation of IGF-IIR, which serves to sequester IGF-II from the growth-promoting IGF-IR and to bind more CORT-up-regulated, latent TGF-beta2 for subsequent plasmin-dependent activation; higher levels of TGF-beta2 signaling down-regulate Cdk4 and result in greater palatal growth inhibition at a critical stage of palatogenesis and, thus, cleft palate. We present an epigenetic model of information processing related to cell proliferation. The model is a dynamical network that uses continuous logic to learn its rules from changing conditions.